J.P. Morgan Chase on Tuesday began a program to encourage small businesses to borrow – and to hire.
The U.S.'s second-biggest bank in terms of assets said it will lower the interest rate charged on a line of credit to small-business customers by half a percentage point for every new hire they make, for up to three hires. Businesses will also get a discount for opening a checking account.
According to the bank's estimates, a small business owner could save about $4,000 over three years on an outstanding balance of $65,000 thanks to the discounts. JPMorgan's average rate on a small-business loan is about 6 percent, compared to a 5.5 percent average across all U.S. banks, according to Reuters.
"We know how important it is to help small businesses because they are core to the U.S. economy," JPMorgan Chief Executive Jamie Dimon said in a statement. The program applies to new lines of credit up to $250,000 or – if you're already a JPMorgan customer – you can increase your line of credit by $10,000 or more.
At the official launch of the program at the bank's New York headquarters, JP Morgan officials promised the group of small business owners who attended that the bank would require "no hoops to jump through" to get the rate reduction.
According to the The Wall Street Journal, Dimon said the bank's meetings with small-business owners suggested half have plans to hire in the next year, compared to a year ago, when most were predicting layoffs.
The program is the latest of a handful from several banks to give small businesses a boost. Last November, Goldman Sachs paired up with Warren Buffett to invest $500 million to boost small firms' access to capital and provide owners with college scholarships. In February, Huntington Bancshares said it would double its annual small-business lending over the next three years, to $1.5 billion.
JPMorgan said its loans to small businesses totaled $2.1 billion in the first quarter, up 31 percent compared with the same period last year.